ITEM 1. FINANCIAL STATEMENTS
Contents
NioCorp Developments Ltd.
Condensed Consolidated Balance Sheets
(expressed in thousands of U.S. dollars, except share data)
(unaudited)
|
|
|
|
As of
|
|
|
|
Note
|
|
March 31,
2019
|
|
|
June 30,
2018
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
$
|
126
|
|
|
$
|
73
|
|
Prepaid expenses and other
|
|
|
|
|
113
|
|
|
|
18
|
|
Other current assets
|
|
4
|
|
|
649
|
|
|
|
474
|
|
Total current assets
|
|
|
|
|
888
|
|
|
|
565
|
|
Non-current
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
|
|
35
|
|
|
|
35
|
|
Available for sale securities at fair value
|
|
|
|
|
8
|
|
|
|
12
|
|
Mineral interests
|
|
|
|
|
10,617
|
|
|
|
10,617
|
|
Total assets
|
|
|
|
$
|
11,548
|
|
|
$
|
11,229
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
|
$
|
3,115
|
|
|
$
|
1,686
|
|
Related party loans
|
|
7
|
|
|
1,480
|
|
|
|
1,480
|
|
Convertible debt, current portion
|
|
5
|
|
|
800
|
|
|
|
756
|
|
Derivative liability, convertible debt
|
|
|
|
|
8
|
|
|
|
8
|
|
Total current liabilities
|
|
|
|
|
5,403
|
|
|
|
3,930
|
|
Convertible debt, net of current portion
|
|
5
|
|
|
2,187
|
|
|
|
4,106
|
|
Total liabilities
|
|
|
|
|
7,590
|
|
|
|
8,036
|
|
SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
Common stock, unlimited shares authorized; shares outstanding: 226,666,534 and 213,405,372, respectively
|
|
6
|
|
|
80,497
|
|
|
|
74,683
|
|
Additional paid-in capital
|
|
|
|
|
12,994
|
|
|
|
12,379
|
|
Accumulated deficit
|
|
|
|
|
(89,072
|
)
|
|
|
(83,349
|
)
|
Accumulated other comprehensive loss
|
|
|
|
|
(461
|
)
|
|
|
(520
|
)
|
Total equity
|
|
|
|
|
3,958
|
|
|
|
3,193
|
|
Total liabilities and equity
|
|
|
|
$
|
11,548
|
|
|
$
|
11,229
|
|
The accompanying notes are an integral part
of these condensed consolidated financial statements.
NioCorp Developments Ltd.
Condensed Consolidated Statements of Operations and Comprehensive
Loss
(expressed in thousands of U.S. dollars, except share and per
share data) (unaudited)
|
|
|
|
For the three months ended
March 31,
|
|
|
For the nine months
ended March 31,
|
|
|
|
Note
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee related costs
|
|
|
|
$
|
552
|
|
|
$
|
410
|
|
|
$
|
1,267
|
|
|
$
|
1,809
|
|
Professional fees
|
|
|
|
|
71
|
|
|
|
150
|
|
|
|
216
|
|
|
|
543
|
|
Exploration expenditures
|
|
8
|
|
|
858
|
|
|
|
483
|
|
|
|
2,863
|
|
|
|
1,499
|
|
Other operating expenses
|
|
|
|
|
106
|
|
|
|
307
|
|
|
|
457
|
|
|
|
994
|
|
Total operating expenses
|
|
|
|
|
1,587
|
|
|
|
1,350
|
|
|
|
4,803
|
|
|
|
4,845
|
|
Change in financial instrument fair value
|
|
5
|
|
|
-
|
|
|
|
1,514
|
|
|
|
633
|
|
|
|
1,811
|
|
Foreign exchange loss (gain)
|
|
|
|
|
(125
|
)
|
|
|
180
|
|
|
|
73
|
|
|
|
(21
|
)
|
Interest expense
|
|
|
|
|
55
|
|
|
|
99
|
|
|
|
210
|
|
|
|
274
|
|
Loss on available for sale securities
|
|
|
|
|
2
|
|
|
|
3
|
|
|
|
4
|
|
|
|
10
|
|
Loss before income taxes
|
|
|
|
|
1,519
|
|
|
|
3,146
|
|
|
|
5,723
|
|
|
|
6,919
|
|
Income tax benefit
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net loss
|
|
|
|
$
|
1,519
|
|
|
$
|
3,146
|
|
|
$
|
5,723
|
|
|
$
|
6,919
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
$
|
1,519
|
|
|
$
|
3,146
|
|
|
$
|
5,723
|
|
|
$
|
6,919
|
|
Other comprehensive (gain) loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reporting currency translation
|
|
|
|
|
113
|
|
|
|
(206
|
)
|
|
|
(59
|
)
|
|
|
52
|
|
Total comprehensive loss
|
|
|
|
$
|
1,632
|
|
|
$
|
2,940
|
|
|
$
|
5,664
|
|
|
$
|
6,971
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per common share, basic and diluted
|
|
|
|
$
|
0.01
|
|
|
$
|
0.02
|
|
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
|
|
225,361,562
|
|
|
|
209,418,833
|
|
|
|
220,890,406
|
|
|
|
205,801,023
|
|
The accompanying notes are an integral part
of these condensed consolidated financial statements.
NioCorp Developments Ltd.
Condensed Consolidated Statements of Cash Flows
(expressed in thousands of U.S. dollars) (unaudited)
|
|
For the nine months
ended March 31,
|
|
|
|
2019
|
|
|
2018
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
Total loss for the period
|
|
$
|
(5,723
|
)
|
|
$
|
(6,919
|
)
|
Non-cash elements included in net loss:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
-
|
|
|
|
4
|
|
Change in financial instrument fair value
|
|
|
633
|
|
|
|
1,811
|
|
Unrealized loss on available-for-sale investments
|
|
|
4
|
|
|
|
10
|
|
Accretion of convertible debt
|
|
|
44
|
|
|
|
118
|
|
Foreign exchange loss (gain)
|
|
|
93
|
|
|
|
24
|
|
Share-based compensation
|
|
|
474
|
|
|
|
1,252
|
|
|
|
|
(4,475
|
)
|
|
|
(3,700
|
)
|
Change in working capital items:
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
-
|
|
|
|
8
|
|
Prepaid expenses
|
|
|
(95
|
)
|
|
|
121
|
|
Accounts payable and accrued liabilities
|
|
|
1,436
|
|
|
|
(1,056
|
)
|
Net cash used in operating activities
|
|
|
(3,134
|
)
|
|
|
(4,627
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
-
|
|
|
|
15
|
|
Net cash used in investing activities
|
|
|
-
|
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Proceeds from issuance of capital stock
|
|
|
2,476
|
|
|
|
1,545
|
|
Share issue costs
|
|
|
(76
|
)
|
|
|
(189
|
)
|
Issuance of convertible debt
|
|
|
1,000
|
|
|
|
3,415
|
|
Related party debt drawdown
|
|
|
-
|
|
|
|
305
|
|
Other current assets
|
|
|
(175
|
)
|
|
|
(456
|
)
|
Net cash provided by financing activities
|
|
|
3,225
|
|
|
|
4,620
|
|
Exchange rate effect on cash and cash equivalents
|
|
|
(38
|
)
|
|
|
(28
|
)
|
Change in cash and cash equivalents during period
|
|
|
53
|
|
|
|
(20
|
)
|
Cash and cash equivalents, beginning of period
|
|
|
73
|
|
|
|
503
|
|
Cash and cash equivalent, end of period
|
|
$
|
126
|
|
|
$
|
483
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|
Amounts paid for interest
|
|
$
|
113
|
|
|
$
|
149
|
|
Amounts paid for income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
Non-cash financing transactions
|
|
|
|
|
|
|
|
|
Lind conversions
|
|
$
|
3,399
|
|
|
$
|
3,693
|
|
Debt to equity conversion
|
|
$
|
-
|
|
|
$
|
207
|
|
The accompanying notes are an integral part
of these condensed consolidated financial statements.
NioCorp Developments Ltd.
Condensed Consolidated Statements of Shareholders’
Equity
(expressed in thousands of U.S. dollars, except for Common Shares
outstanding) (unaudited)
|
|
Nine months ended March 31, 2019 and 2018
|
|
|
|
Common
Shares
Outstanding
|
|
|
Common
Stock
|
|
|
Additional
Paid-in
Capital
|
|
|
Deficit
|
|
|
Accumulated
Other
Comprehensive
Loss
|
|
|
Total
|
|
Balance, June 30, 2017
|
|
|
198,776,337
|
|
|
$
|
68,029
|
|
|
$
|
10,320
|
|
|
$
|
(74,852
|
)
|
|
$
|
(606
|
)
|
|
$
|
2,891
|
|
Exercise of Options
|
|
|
10,091
|
|
|
|
7
|
|
|
|
(2
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
5
|
|
Fair value of broker Warrants granted
|
|
|
-
|
|
|
|
-
|
|
|
|
41
|
|
|
|
-
|
|
|
|
-
|
|
|
|
41
|
|
Fair value of Lind Warrants granted
|
|
|
-
|
|
|
|
-
|
|
|
|
552
|
|
|
|
-
|
|
|
|
-
|
|
|
|
552
|
|
Private placement – July 2017
|
|
|
2,962,500
|
|
|
|
1,540
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,540
|
|
Private placement – September 2017
|
|
|
415,747
|
|
|
|
207
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
207
|
|
Debt conversions
|
|
|
8,037,767
|
|
|
|
3,693
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,693
|
|
Share issuance costs
|
|
|
-
|
|
|
|
(230
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(230
|
)
|
Share-based payments
|
|
|
-
|
|
|
|
-
|
|
|
|
1,252
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,252
|
|
Reporting currency presentation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(52
|
)
|
|
|
(52
|
)
|
Loss for the year
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(6,919
|
)
|
|
|
-
|
|
|
|
(6,919
|
)
|
Balance, March 31, 2018
|
|
|
210,202,442
|
|
|
$
|
73,246
|
|
|
$
|
12,163
|
|
|
$
|
(81,771
|
)
|
|
$
|
(658
|
)
|
|
$
|
2,980
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2018
|
|
|
213,405,372
|
|
|
$
|
74,683
|
|
|
$
|
12,379
|
|
|
$
|
(83,349
|
)
|
|
$
|
(520
|
)
|
|
$
|
3,193
|
|
Exercise of Warrants
|
|
|
115,000
|
|
|
|
64
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
64
|
|
Exercise of Options
|
|
|
16,203
|
|
|
|
15
|
|
|
|
(15
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Fair value of Lind Warrants granted
|
|
|
-
|
|
|
|
-
|
|
|
|
156
|
|
|
|
-
|
|
|
|
-
|
|
|
|
156
|
|
Private placements – September 2018
|
|
|
4,975,158
|
|
|
|
2,412
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,412
|
|
Debt conversions
|
|
|
8,154,801
|
|
|
|
3,399
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,399
|
|
Share issuance costs
|
|
|
-
|
|
|
|
(76
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(76
|
)
|
Share-based payments
|
|
|
-
|
|
|
|
-
|
|
|
|
474
|
|
|
|
-
|
|
|
|
-
|
|
|
|
474
|
|
Reporting currency presentation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
59
|
|
|
|
59
|
|
Loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,723
|
)
|
|
|
-
|
|
|
|
(5,723
|
)
|
Balance, March 31, 2019
|
|
|
226,666,534
|
|
|
$
|
80,497
|
|
|
$
|
12,994
|
|
|
$
|
(89,072
|
)
|
|
$
|
(461
|
)
|
|
$
|
3,958
|
|
|
|
Three months ended March 31, 2019 and 2018
|
|
|
|
Common
Shares
Outstanding
|
|
|
Common
Stock
|
|
|
Additional
Paid-in
Capital
|
|
|
Deficit
|
|
|
Accumulated
Other
Comprehensive
Loss
|
|
|
Total
|
|
Balance, December 31, 2017
|
|
|
208,861,265
|
|
|
$
|
72,583
|
|
|
$
|
11,599
|
|
|
$
|
(78,625
|
)
|
|
$
|
(865
|
)
|
|
$
|
4,692
|
|
Fair value of Lind Warrants granted
|
|
|
-
|
|
|
|
-
|
|
|
|
425
|
|
|
|
-
|
|
|
|
-
|
|
|
|
425
|
|
Debt conversions
|
|
|
1,341,177
|
|
|
|
663
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
663
|
|
Share-based payments
|
|
|
-
|
|
|
|
-
|
|
|
|
139
|
|
|
|
-
|
|
|
|
-
|
|
|
|
139
|
|
Reporting currency presentation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
206
|
|
|
|
206
|
|
Loss for the year
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,146
|
)
|
|
|
-
|
|
|
|
(3,146
|
)
|
Balance, March 31, 2018
|
|
|
210,202,442
|
|
|
$
|
73,246
|
|
|
$
|
12,163
|
|
|
$
|
(81,771
|
)
|
|
$
|
(659
|
)
|
|
$
|
2,979
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2018
|
|
|
223,936,708
|
|
|
$
|
79,320
|
|
|
$
|
12,746
|
|
|
$
|
(87,553
|
)
|
|
$
|
(348
|
)
|
|
$
|
4,165
|
|
Debt conversions
|
|
|
2,729,826
|
|
|
|
1,177
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,177
|
|
Share-based payments
|
|
|
-
|
|
|
|
-
|
|
|
|
248
|
|
|
|
-
|
|
|
|
-
|
|
|
|
248
|
|
Reporting currency presentation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(113
|
)
|
|
|
(113
|
)
|
Loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,519
|
)
|
|
|
-
|
|
|
|
(1,519
|
)
|
Balance, March 31, 2019
|
|
|
226,666,534
|
|
|
$
|
80,497
|
|
|
$
|
12,994
|
|
|
$
|
(89,072
|
)
|
|
$
|
(461
|
)
|
|
$
|
3,958
|
|
The accompanying notes are an integral part
of these condensed consolidated financial statements.
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
March 31, 2019
(expressed in thousands of U.S. dollars, except per share amounts
or as otherwise stated) (unaudited)
|
1.
|
DESCRIPTION OF BUSINESS
|
NioCorp Developments Ltd. (“NioCorp”
or the “Company”) was incorporated on February 27, 1987 under the laws of the Province of British Columbia and currently
operates in one reportable operating segment consisting of exploration and development of mineral deposits in North America, specifically,
the Elk Creek Niobium/Scandium/Titanium property (the “Elk Creek Project”) located in southeastern Nebraska.
These financial statements have been prepared
on a going concern basis that contemplates the realization of assets and discharge of liabilities at their carrying values in the
normal course of business for the foreseeable future. These financial statements do not reflect any adjustments that may be necessary
if the Company is unable to continue as a going concern.
The Company currently earns no operating
revenues and will require additional capital in order to advance the Elk Creek Project. The Company’s ability to continue
as a going concern is uncertain and is dependent upon the generation of profits from mineral properties, obtaining additional financing,
and maintaining continued support from its shareholders and creditors.
|
a)
|
Basis of Preparation and Consolidation
|
The accompanying unaudited interim
condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles of the
United States of America (“US GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”).
The interim condensed consolidated financial statements include the consolidated accounts of the Company and its wholly-owned subsidiaries
with all significant intercompany transactions eliminated. The accounting policies followed in preparing these interim condensed
consolidated financial statements are those used by the Company as set out in the audited consolidated financial statements for
the year ended June 30, 2018.
In the opinion of management,
all adjustments considered necessary (including reclassifications and normal recurring adjustments) to present fairly the financial
position, results of operations, and cash flows at March 31, 2019, and for all periods presented, have been included in these interim
condensed consolidated financial statements. Certain information and footnote disclosures normally included in the consolidated
financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to appropriate SEC rules and regulations.
These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial
statements for the year ended June 30, 2018. The interim results are not necessarily indicative of results for the full year ending
June 30, 2019, or future operating periods.
|
b)
|
Recent Accounting Standards
|
Issued and Not Effective
From time to time, new accounting
pronouncements are issued by the Financial Accounting Standards Board (“FASB”) that are adopted by the Company as of
the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards did
not or will not have a material impact on the Company’s consolidated financial statements upon adoption.
In February 2016, Accounting
Standards Update (“ASU”) 2016-02 was issued related to leases, which was further amended in September 2017 by ASU 2017-13,
in January 2018 by ASU 2018-01 and in July 2018 by ASU 2018-10 and 2018-11. The new guidance modifies the classification criteria
and requires lessees to recognize the assets and liabilities arising from most leases on the balance sheet. The new guidance is
effective for fiscal years beginning after December 15, 2018 and early adoption is permitted. The Company anticipates adopting
the new guidance effective with our fiscal year beginning July 1, 2019. Adoption of this guidance is not expected to materially
increase the Company’s assets and liabilities.
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
March 31, 2019
(expressed in thousands of U.S. dollars, except per share amounts
or as otherwise stated) (unaudited)
In June 2018, the FASB
issued ASU 2018-07, Compensation - Stock Compensation — Improvements to Nonemployee Share-Based Payment Accounting. This
update aims to simplify the accounting for share-based payments awarded to non-employees for goods or services acquired. The update
specifies that the measurement date is the grant date and that awards are required to be measured at fair value. The amendments
in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal
years. The Company is currently evaluating the potential impact of adopting this guidance on its consolidated financial statements.
In August 2018, the FASB issued
ASU 2018-13 - Fair Value Measurements (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value
Measurement. This update modifies the disclosure requirements on fair value measurements in Topic 820 and eliminates ‘at
a minimum’ from the phrase ‘an entity shall disclose at a minimum’ to promote the appropriate exercise of discretion
by entities when considering fair value disclosures and to clarify that materiality is an appropriate consideration. The guidance
is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption
permitted. The Company is currently evaluating the impacts that adoption of this guidance will have on its consolidated financial
statements.
The preparation of consolidated
financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements,
and the reported amounts of expenses during the reporting period. The Company regularly evaluates estimates and assumptions related
to the deferred income tax asset valuations, convertible debt valuations, and share-based compensation. The Company bases its estimates
and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the
circumstances, the results of which form the basis for making judgments about the other sources. The actual results experienced
by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences
between estimates and the actual results, future results of operations will be affected.
The Company incurred a loss of $5,723 for
the nine months ended March 31, 2019 (2018 - $6,919) and had a working capital deficit and an accumulated deficit of $4,515 and
$89,072, respectively, as of March 31, 2019. These factors indicate the existence of a material uncertainty that raises substantial
doubt about the Company’s ability to continue as a going concern.
The Company’s ability to continue
operations and fund its expenditures is dependent on management’s ability to secure additional financing. Management is actively
pursuing such additional sources of financing, and while it has been successful in doing so in the past, there can be no assurance
it will be able to do so in the future. These consolidated financial statements do not give effect to any adjustments required
to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those
reflected in the accompanying financial statements.
Other current assets include legal and
other professional fees associated with obtaining project debt financing for the Elk Creek Project. Amounts will be deferred until
funding is completed, at which time the balance will become a direct deduction from the related debt liability.
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
March 31, 2019
(expressed in thousands of U.S. dollars, except per share amounts
or as otherwise stated) (unaudited)
|
|
As of
|
|
|
|
March 31, 2019
|
|
|
June 30, 2018
|
|
Convertible notes, current portion
|
|
$
|
800
|
|
|
$
|
756
|
|
|
|
|
|
|
|
|
|
|
Convertible security, noncurrent
|
|
$
|
2,187
|
|
|
$
|
4,106
|
|
Convertible Security Funding
Changes in the Lind Asset Management IV,
LLC (“Lind”) convertible securities balance are comprised of the following:
|
|
Convertible Security
|
|
Balance, June 30, 2018
|
|
$
|
4,106
|
|
Additional debt drawdown
|
|
|
1,000
|
|
Conversions, at fair value
|
|
|
(3,399
|
)
|
Change in fair market value
|
|
|
480
|
|
Balance, March 31, 2019
|
|
$
|
2,187
|
|
On June 27, 2018, the Company signed a
definitive convertible security funding agreement (the “Subsequent Lind Agreement”) with Lind. Pursuant to the issuance
of a convertible security (the “Subsequent Convertible Security” and, together with the previous Lind convertible security
(the “Original Convertible Security”), the “Convertible Securities”), a total of $1,000 was funded on July
9, 2018. The Subsequent Lind Agreement replaces the Convertible Security Funding Agreement, dated December 14, 2015, between the
Company and Lind (the “Original Lind Agreement”) in respect of the remaining $1,000 funding amount available under
the Original Lind Agreement and accordingly, no further funding will be provided by Lind to the Company under the Original Lind
Agreement. The terms of the Subsequent Convertible Security are substantially similar to the terms governing like securities under
the Original Lind Agreement. As a result, upon payment of the $1,000 in funding by Lind to the Company, the Subsequent Convertible
Security was issued in the amount of $1,200 ($1,000 in funding plus implied interest), and the Company issued warrants (“Warrants”)
to Lind, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Black Scholes Pricing Model Inputs
|
Funding Date
|
|
Face
Value
1
|
|
|
Warrants
Issued
2
|
|
|
Issue
Price
3
|
|
Warrant Expiry Date
|
|
Risk-
free
Rate
|
|
Yield
|
|
|
Volatility
|
|
|
Expected
Life
|
July 9, 2018
|
|
$
|
1,200
|
|
|
|
1,035,319
|
|
|
C$0.77
|
|
July 9, 2021
|
|
2.0%
|
|
|
0
|
%
|
|
|
58.3
|
%
|
|
3 years
|
|
1
|
Includes implied interest.
|
|
2
|
The value of Warrants issued totaled $156, which was expensed
to Change in Financial Instrument Fair Value.
|
|
3
|
The price to convert one Warrant into one common share
of the Company (“Common Share”).
|
The Convertible Securities are convertible
into Common Shares at a conversion price equal to 85% of the volume weighted average trading price of the Common Shares (in Canadian
dollars) on the Toronto Stock Exchange for the five consecutive trading days immediately prior to the date on which Lind provides
the Company with notice of its intention to convert an amount of the applicable Convertible Security from time to time. During
the nine-month period ended March 31, 2019, $3,100 principal amount of the Original Convertible Security was converted into 8,154,801
Common Shares.
The Convertible Securities contains financial and non-financial
covenants customary for a facility of its size and nature, and includes a financial covenant defining an event of default as all
present and future liabilities of the Company or any of its subsidiaries, exclusive of related party loans, for an amount or amounts
exceeding $2,000 and which have not been satisfied on time or within 90 days of invoice, or have become prematurely payable as
a result of its default or breach. The Company was in compliance with these covenants as of March 31, 2019.
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
March 31, 2019
(expressed in thousands of U.S. dollars, except per share amounts
or as otherwise stated) (unaudited)
Convertible Notes
Changes in the Company’s outstanding
convertible promissory notes (the “Convertible Notes”) balance are comprised of the following:
|
|
Convertible Notes
|
|
Balance, June 30, 2018
|
|
$
|
756
|
|
Accreted interest, net of interest paid
|
|
|
44
|
|
Balance, March 31, 2019
|
|
$
|
800
|
|
The changes in the derivative liability
related to the conversion feature of the Convertible Notes are as follows:
|
|
Derivative
Liability
|
|
Balance, June 30, 2018
|
|
$
|
8
|
|
Change in fair value of derivative liability
|
|
|
-
|
|
Balance, March 31, 2019
|
|
$
|
8
|
|
Effective October 10, 2018, the due date
for the Convertible Notes was extended for one year to October 14, 2019. All other terms and conditions remained unchanged.
On September 14, 2018, the Company
completed the first tranche closing (the “First Tranche Closing”) of a non-brokered private placement (the “September
2018 Offering”) of units (each a “Unit”). The First Tranche Closing consisted of the issuance of 2,917,587 Units,
at a price of C$0.63 per Unit, for gross proceeds of C$1,838. Each Unit issued in connection with the First Tranche Closing consists
of one Common Share and one-half of one Warrant. Each Warrant entitles the holder thereof to purchase one additional Common Share
at a price of C$0.75 until September 14, 2020.
On September 28, 2018, the Company
completed the second and final tranche closing (the “Second Tranche Closing”) of the September 2018 Offering. The Second
Tranche Closing consisted of the issuance of 2,057,571 Units, at a price of C$0.63 per Unit, for gross proceeds of C$1,296. Each
Unit issued in connection with the Second Tranche Closing consists of one Common Share and one-half of one Warrant. Each Warrant
entitles the holder thereof to purchase one additional Common Share at a price of C$0.75 until September 28, 2020.
Net proceeds from the September
2018 Offering will be used by the Company for continued development of NioCorp’s Elk Creek Project and for general corporate
purposes. The Company paid cash commissions of C$18 in connection with the September 2018 Offering to brokers outside of the United
States.
|
|
Number of
Options
|
|
|
Weighted
Average
Exercise
Price (C$)
|
|
Balance, June 30, 2018
|
|
|
15,587,409
|
|
|
$
|
0.65
|
|
Issued
|
|
|
4,445,000
|
|
|
|
0.54
|
|
Exercised
|
|
|
(16,203
|
)
|
|
|
0.47
|
|
Cancelled/expired
|
|
|
(466,297
|
)
|
|
|
0.76
|
|
Balance, March 31, 2019
|
|
|
19,549,909
|
|
|
$
|
0.62
|
|
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
March 31, 2019
(expressed in thousands of U.S. dollars, except per share amounts
or as otherwise stated) (unaudited)
The following table summarizes
information about options to purchase Common Shares (“Options”) outstanding at March 31, 2019:
Exercise
Price
(C$)
|
|
|
Expiry
Date
|
|
Number
Outstanding
|
|
|
Aggregate
Intrinsic
Value (C$)
|
|
|
Number
Exercisable
|
|
|
Aggregate
Intrinsic
Value (C$)
|
|
$
|
0.47
|
|
|
November
9, 2022
|
|
|
3,800,000
|
|
|
$
|
494
|
|
|
|
3,800,000
|
|
|
$
|
494
|
|
$
|
0.54
|
|
|
November 15, 2023
|
|
|
4,445,000
|
|
|
|
267
|
|
|
|
-
|
|
|
|
-
|
|
$
|
0.62
|
|
|
January 19, 2021
|
|
|
5,264,909
|
|
|
|
-
|
|
|
|
5,264,909
|
|
|
|
-
|
|
$
|
0.76
|
|
|
March 6, 2022
|
|
|
5,400,000
|
|
|
|
-
|
|
|
|
5,400,000
|
|
|
|
-
|
|
$
|
0.94
|
|
|
April 28, 2019
|
|
|
100,000
|
|
|
|
-
|
|
|
|
100,000
|
|
|
|
-
|
|
$
|
0.94
|
|
|
July
21, 2021
|
|
|
540,000
|
|
|
|
-
|
|
|
|
540,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
19,549,909
|
|
|
$
|
761
|
|
|
|
15,104,909
|
|
|
$
|
494
|
|
The aggregate intrinsic value
in the preceding table represents the total intrinsic value, based on the Company’s closing Common Share price of C$0.60
as of March 31, 2019, that would have been received by the Option holders had all Option holders exercised their Options as of
that date. The total number of in-the-money Options vested and exercisable as of March 31, 2019, was 3,800,000. The total intrinsic
value of Options exercised during the nine months ended March 31, 2019, was C$8.
As of March 31, 2019, there
was $539 of unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Option plans.
The cost is expected to be recognized over a remaining weighted average period of approximately 1.1 years.
|
|
Warrants
|
|
|
Weighted Average
Exercise Price (C$)
|
|
Balance June 30, 2018
|
|
|
28,648,610
|
|
|
$
|
0.77
|
|
Granted
|
|
|
3,522,896
|
|
|
|
0.76
|
|
Exercised
|
|
|
(115,000
|
)
|
|
|
0.75
|
|
Expired
|
|
|
(12,160,285
|
)
|
|
|
0.74
|
|
Balance, March 31, 2019
|
|
|
19,896,221
|
|
|
$
|
0.79
|
|
As discussed above under Note
5, the Company granted 1,035,319 Warrants to Lind in connection with the Convertible Security funding increases. As discussed above
under Note 6a, the Company granted 2,487,577 Warrants in conjunction with the September 2018 Offering.
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
March 31, 2019
(expressed in thousands of U.S. dollars, except per share amounts
or as otherwise stated) (unaudited)
At March 31, 2019, the Company had outstanding
exercisable Warrants, as follows:
Number
|
|
|
Exercise
Price (C$)
|
|
|
Expiry Date
|
|
355,132
|
|
|
|
0.54
|
|
|
December 6, 2020
|
|
308,901
|
|
|
|
0.62
|
|
|
October 31, 2020
|
|
283,413
|
|
|
|
0.66
|
|
|
September 28, 2020
|
|
541,435
|
|
|
|
0.69
|
|
|
February 7, 2021
|
|
529,344
|
|
|
|
0.70
|
|
|
February 5, 2021
|
|
1,546,882
|
|
|
|
0.72
|
|
|
January 30, 2021
|
|
1,058,872
|
|
|
|
0.72
|
|
|
April 5, 2021
|
|
260,483
|
|
|
|
0.73
|
|
|
August 15, 2020
|
|
1,458,792
|
|
|
|
0.75
|
|
|
September 14, 2020
|
|
1,028,785
|
|
|
|
0.75
|
|
|
September 28, 2020
|
|
1,035,319
|
|
|
|
0.77
|
|
|
July 9, 2021
|
|
3,155,062
|
|
|
|
0.79
|
|
|
July 26, 2021
|
|
3,860,800
|
|
|
|
0.85
|
|
|
February 14, 2020
|
|
3,043,024
|
|
|
|
0.85
|
|
|
February 21, 2020
|
|
539,307
|
|
|
|
0.85
|
|
|
February 28, 2020
|
|
890,670
|
|
|
|
0.90
|
|
|
March 31, 2020
|
|
19,896,221
|
|
|
|
|
|
|
|
|
7.
|
RELATED PARTY TRANSACTIONS AND BALANCES
|
The Company has a loan with Mark Smith,
President, Chief Executive Officer (“CEO”) and Executive Chairman of NioCorp (the “Original Smith Loan”),
that bears an interest rate of 10%, is secured by the Company’s assets pursuant to a concurrently executed general security
agreement (the “General Security Agreement”), and is subject to both a 2.5% establishment fee and 2.5% prepayment fee.
As of March 31, 2019, the principal amount outstanding under the Original Smith Loan was $1,000 and matures on June 17, 2019.
The Company also has a non-revolving credit
facility agreement (the “Credit Facility”) in the amount of $2,000 with Mr. Smith. The Credit Facility bears an interest
rate of 10% and drawdowns from the Credit Facility are subject to a 2.5% establishment fee. Amounts outstanding under the Credit
Facility are secured by all of the Company’s assets pursuant to the General Security Agreement. The Credit Facility contains
financial and non-financial covenants customary for a facility of its size and nature. As of March 31, 2019, the principal amount
outstanding under the Credit Facility was $480 and matures on June 16, 2019.
Accounts payable and accrued liabilities
included interest payable to Mr. Smith of $124.
|
8.
|
Exploration Expenditures
|
|
|
For the Three Months
Ended March 31,
|
|
|
For the Nine Months
Ended March 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Technical studies and engineering
|
|
$
|
667
|
|
|
$
|
266
|
|
|
$
|
2,317
|
|
|
$
|
720
|
|
Field management and other
|
|
|
148
|
|
|
|
141
|
|
|
|
421
|
|
|
|
483
|
|
Metallurgical development
|
|
|
43
|
|
|
|
52
|
|
|
|
125
|
|
|
|
224
|
|
Geologists and field staff
|
|
|
-
|
|
|
|
24
|
|
|
|
-
|
|
|
|
72
|
|
Total
|
|
$
|
858
|
|
|
$
|
483
|
|
|
$
|
2,863
|
|
|
$
|
1,499
|
|
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
March 31, 2019
(expressed in thousands of U.S. dollars, except per share amounts
or as otherwise stated) (unaudited)
|
9.
|
Fair Value Measurements
|
The Company measures the fair value of
financial assets and liabilities based on US GAAP guidance which defines fair value, establishes a framework for measuring fair
value, and expands disclosures about fair value measurements.
The Company classifies financial assets
and liabilities as held-for-trading, available-for-sale, held-to-maturity, loans and receivables, or other financial liabilities
depending on their nature. Financial assets and financial liabilities are recognized at fair value on their initial recognition.
Financial assets and liabilities classified
as held-for-trading are measured at fair value, with gains and losses recognized in net income. Financial assets classified as
held-to-maturity, loans and receivables, and financial liabilities other than those classified as held-for-trading are measured
at amortized cost, using the effective interest method of amortization. Financial assets classified as available-for-sale are measured
at fair value, with unrealized gains and losses being recognized in income.
Financial instruments including receivables,
accounts payable and accrued liabilities, and related party loans are carried at amortized cost, which management believes approximates
fair value due to the short-term nature of these instruments.
The following tables present information
about the assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2019 and June 30, 2018, respectively,
and indicate the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. In general,
fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical instruments. Fair values
determined by Level 2 inputs utilize data points that are observable, such as quoted prices, interest rates, and yield curves.
Fair values determined by Level 3 inputs are unobservable data points for the financial instrument and include situations where
there is little, if any, market activity for the instrument.
|
|
As of March 31, 2019
|
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
126
|
|
|
$
|
126
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Available-for-sale securities
|
|
|
8
|
|
|
|
8
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
$
|
134
|
|
|
$
|
134
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible debt
|
|
$
|
2,187
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,187
|
|
Derivative liability, convertible debt
|
|
|
8
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8
|
|
Total
|
|
$
|
2,195
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,195
|
|
|
|
As of June 30, 2018
|
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
73
|
|
|
$
|
73
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Available-for-sale securities
|
|
|
12
|
|
|
|
12
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
$
|
85
|
|
|
$
|
85
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible debt
|
|
$
|
4,106
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
4,106
|
|
Derivative liability, convertible debt
|
|
|
8
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8
|
|
Total
|
|
$
|
4,114
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
4,114
|
|
The Company measures the fair market value
of the Level 3 components using the Black Scholes model and discounted cash flows, as appropriate. These models take into account
management’s best estimate of the conversion price of the stock, an estimate of the expected time to conversion, an estimate of
the stock’s volatility, and the risk-free rate of return expected for an instrument with a term equal to the duration of the convertible
debt.
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
March 31, 2019
(expressed in thousands of U.S. dollars, except per share amounts
or as otherwise stated) (unaudited)
The following table sets forth a reconciliation
of changes in the fair value of the Company’s convertible debt components classified as Level 3 in the fair value hierarchy:
Balance, June 30, 2018
|
|
$
|
4,114
|
|
Additional debt drawdown
|
|
|
1,000
|
|
Conversions to equity
|
|
|
(3,399
|
)
|
Realized and unrealized losses
|
|
|
480
|
|
Balance, March 31, 2019
|
|
$
|
2,195
|
|
On April 29, 2019, the Company
closed the first tranche (the “First Tranche Closing”) of a non-brokered private placement (the “April 2019
Private Placement”) of Units of the Company. In connection with the First Tranche Closing, a total of 1,666,664 Units were
issued at a price per Unit of C$0.60, for total gross proceeds to the Company of approximately C$1 million. On May 9, 2019, the
Company closed the second and final tranche of the April 2019 Private Placement (the “Second Tranche Closing”) and
a total of 1,290,500 Units were issued at a price per Unit of C$0.60, for total gross proceeds to the Company of approximately
C$0.8 million.
Each Unit issued pursuant to the April
2019 Private Placement consisted of one Common Share and one-half of one Common Share purchase Warrant. Each full Warrant entitles
the holder thereof to purchase one additional Common Share at a price of C$0.72 for a period of two years from their date of issuance.
Proceeds from the April 2019 Private Placement will be used for working capital and general corporate purposes.
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
|
The following discussion and analysis
should be read in conjunction with our unaudited condensed interim consolidated financial statements as of, and for the three and
nine months ended March 31, 2019, and the related notes thereto, which have been prepared in accordance with generally accepted
accounting principles in the United States (“US GAAP”). This discussion and analysis contains forward-looking
statements and forward-looking information that involve risks, uncertainties, and assumptions. Our actual results may differ materially
from those anticipated in these forward-looking statements and information as a result of many factors, including, but not limited
to, those set forth elsewhere in this Quarterly Report on Form 10-Q. See “Note Regarding Forward-Looking Statements”
below.
All currency amounts are stated in
thousands
of U.S. dollars
unless noted otherwise.
As used in this report, unless the context otherwise indicates,
references to “we,” “our,” the “Company,” “NioCorp,” and “us” refer
to NioCorp Developments Ltd. and its subsidiaries, collectively.
Note Regarding Forward Looking Statements
This Quarterly Report
on Form 10-Q and the exhibits attached hereto contain “forward-looking statements” within the meaning of Section 27A
of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), and “forward-looking information” within the meaning of applicable
Canadian securities legislation (collectively, “forward-looking statements”). Such forward-looking statements concern
our anticipated results and developments in the operations of the Company in future periods, planned exploration activities, the
adequacy of the Company’s financial resources, and other events or conditions that may occur in the future. Forward-looking
statements are frequently, but not always, identified by words such as “expects,” “anticipates,” “believes,”
“intends,” “estimates,” “potential,” “possible,” and similar expressions, or statements
that events, conditions, or results “will,” “may,” “could,” or “should” (or the
negative and grammatical variations of any of these terms) occur or be achieved. Any statements that express or involve discussions
with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, or future events or performance
(often, but not always, using words or phrases such as “expects” or “does not expect,” “is expected,”
“anticipates” or “does not anticipate,” “plans,” “estimates,” or “intends,”
or stating that certain actions, events, or results “may,” “could,” “would,” “might,”
or “will” be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements.
Such forward-looking statements reflect the Company’s current views with respect to future events and are subject to certain
known and unknown risks, uncertainties, and assumptions. Many factors could cause actual results, performance, or achievements
to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking
statements, including, among others, risks related to the following:
|
·
|
risks related to our ability to operate
as a going concern;
|
|
·
|
risks related to our requirement of significant
additional capital;
|
|
·
|
risks related to our limited operating
history;
|
|
·
|
risks related to changes in economic valuations
of the Elk Creek Project, such as net present value (“NPV”) calculations, changes, or disruptions in the securities
markets;
|
|
·
|
risks related to our history of losses;
|
|
·
|
risks related to cost increases for our
exploration and, if warranted, development projects;
|
|
·
|
risks related to feasibility study results;
|
|
·
|
risks related to the determination of
the economic viability of a deposit;
|
|
·
|
risks related to mineral exploration and
production activities;
|
|
·
|
risks related to our lack of mineral production
from our properties;
|
|
·
|
risks related to the results of our metallurgical
testing;
|
|
·
|
risks related to the price volatility
of commodities;
|
|
·
|
risks related to estimates of mineral
resources and reserves;
|
|
·
|
risks related to changes in mineral resource
and reserve estimates;
|
|
·
|
risks related to differences in United
States and Canadian reserve and resource reporting;
|
|
·
|
risks related to our exploration activities
being unsuccessful;
|
|
·
|
risks related to our ability to obtain
permits and licenses for production;
|
|
·
|
risks related to government and environmental
regulations that may increase our costs of doing business or restrict our operations;
|
|
·
|
risks related to proposed legislation
that may significantly affect the mining industry;
|
|
·
|
risks related to land reclamation requirements;
|
|
·
|
risks related to competition in the mining
industry;
|
|
·
|
risks related to the difficulties of handling
the disposal of mine water at our Elk Creek Project;
|
|
·
|
risks related to equipment and supply
shortages;
|
|
·
|
risks related to current and future joint
ventures and partnerships;
|
|
·
|
risks related to our ability to attract
qualified management;
|
|
·
|
risks related to the ability to enforce
judgment against certain of our Directors;
|
|
·
|
risks related to currency fluctuations;
|
|
·
|
risks related to claims on the title to
our properties;
|
|
·
|
risks related to surface access on our
properties;
|
|
·
|
risks related to potential future litigation;
|
|
·
|
risks related to our lack of insurance
covering all our operations;
|
|
·
|
risks related to covenants contained in
agreements with our secured creditors that may affect our assets;
|
|
·
|
risks related to the extent to which our
level of indebtedness may impair our ability to obtain additional financing;
|
|
·
|
risks related to our status as a “passive
foreign investment company” under the United States Internal Revenue Code of 1986, as amended;
|
|
·
|
risks related to the Common Shares, including
price volatility, lack of dividend payments, dilution, and penny stock rules; and
|
|
·
|
risks related to our debt.
|
Should one or more of
these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially
from those described herein. This list is not exhaustive of the factors that may affect any of the Company’s forward-looking
statements. Forward-looking statements are statements about the future and are inherently uncertain, and actual achievements of
the Company or other future events or conditions may differ materially from those reflected in the forward-looking statements due
to a variety of risks, uncertainties, and other factors, including without limitation those discussed under the heading “Risk
Factors” of our Annual Report on Form 10-K for the fiscal year ended June 30, 2018, as well as other factors described elsewhere
in this report and the Company’s other reports filed with the Securities and Exchange Commission (“SEC”).
The Company’s forward-looking
statements contained in this Quarterly Report on Form 10-Q are based on the beliefs, expectations, and opinions of management as
of the date of this report. The Company does not assume any obligation to update forward-looking statements if circumstances or
management’s beliefs, expectations, or opinions should change, except as required by law. For the reasons set forth above,
investors should not attribute undue certainty to, or place undue reliance on, forward-looking statements.
National Instrument 43-101 Compliance
Mr. Jean-Francois St-Onge,
P.Eng, and Mr. Glen Kuntz, P. Geo, both of whom are independent Qualified Persons as defined in NI 43-101, have reviewed and
approved the mineral reserves and mineral resources, respectively, and have verified the data contained in those portions of the
Elk Creek Project disclosures relevant to their area of responsibility included in this Quarterly Report on Form 10-Q related to
the updated NI 43-101 Feasibility Study (the “2019 Feasibility Study”).
Scott Honan, M.Sc., SME-RM, a qualified
person as defined by National Instrument 43-101 - Standards of Disclosure for Mineral Projects (“NI 43-101”), has supervised
the preparation of the scientific and technical information that forms the basis for the Elk Creek Project disclosure in this Quarterly
Report on Form 10-Q and has approved the disclosure in this Quarterly Report on Form 10-Q related thereto. Mr. Honan is not independent
of the Company, as he is the Vice President, Business Development. Additional information on the updated 2019 Feasibility Study
is available in our April 16, 2019 press release, which is available on the Company’s website. The full NI 43-101 Technical
Report, incorporating the results of the 2019 Feasibility Study, is expected to be filed on SEDAR and our corporate website by
May 31, 2019.
Company Overview
NioCorp is developing the Elk Creek Project,
located in southeast Nebraska. The Elk Creek Project is an advanced Niobium (“Nb”)/Scandium (“Sc”)/Titanium
(“Ti”) exploration project. Niobium is used to produce various superalloys that are extensively used in high performance
aircraft and jet turbines. It also is used in High-Strength, Low-Alloy (“HSLA”) steel, a stronger steel used in automotive,
bridges, structural systems, buildings, pipelines, and other applications that generally reduces the weight of those applications,
which can result in environmental benefits, including reduced fuel consumption and material usage and fewer air emissions. Scandium
can be combined with aluminum to make high-performance alloys with increased strength and improved corrosion resistance. Scandium
also is a critical component of advanced solid oxide fuel cells, an environmentally preferred technology for high-reliability,
distributed electricity generation. Titanium is a component of various superalloys and other applications that are used for aerospace
applications, weapons systems, protective armor, medical implants and many others. It also is used in pigments for paper, paint,
and plastics.
Our primary business strategy is to advance
our Elk Creek Project to commercial production. We are focused on obtaining additional funds to carry out our near-term planned
work programs associated with securing the project financing necessary to complete mine development and construction of the Elk
Creek Project.
Emerging Growth Company Status
We qualify as an “emerging growth
company” as defined in Section 101 of the Jumpstart our Business Startups Act (“JOBS Act”) as we do not have
more than $1.07 billion in annual gross revenue and did not have such amount as of June 30, 2018, this being the last day of our
most recently completed fiscal year.
We may lose our status as an emerging growth
company on the last day of our fiscal year during which (i) our annual gross revenue exceeds $1.07 billion or (ii) we issue more
than $1.07 billion in non-convertible debt in a three-year period. We will lose our status as an emerging growth company if at
any time we are deemed to be a large accelerated filer, as defined in Rule 405 under the Exchange Act. We will lose our status
as an emerging growth company on the last day of our fiscal year following the fifth anniversary of the date of our first sale
of Common Shares pursuant to an effective registration statement.
As an emerging growth company under the
JOBS Act, we have elected to opt out of the extended transition period for complying with new or revised standards pursuant to
Section 107(b) of the JOBS Act. The election is irrevocable.
As an emerging growth company, we are exempt
from Section 404(b) of the Sarbanes-Oxley Act of 2002 and Section 14A(a) and (b) of the Exchange Act. Such sections are described
below:
|
·
|
Section 404(b) of the Sarbanes-Oxley Act
of 2002 requires a public company’s auditor to attest to, and report on, management’s assessment of its internal controls.
|
|
·
|
Sections 14A(a) and (b) of the Exchange
Act, implemented by Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank
Act”) Act, require companies to hold shareholder advisory votes on executive compensation and golden parachute compensation.
|
As long as we qualify as an emerging growth
company, we will not be required to comply with the requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002 and Section
14A (a) and (b) of the Exchange Act.
Recent Corporate Events
On April 29, 2019, the Company closed
the first tranche (the “First Tranche Closing”) of a non-brokered private placement (the “April 2019 Private
Placement”) of Units of the Company. In connection with the First Tranche Closing, a total of 1,666,664 Units were issued
at a price per Unit of C$0.60, for total gross proceeds to the Company of approximately C$1 million. On May 9, 2019, the Company
closed the second and final tranche of the April 2019 Private Placement (the “Second Tranche Closing”) and a total
of 1,290,500 Units were issued at a price per Unit of C$0.60, for total gross proceeds to the Company of approximately C$0.8 million.
Each Unit issued pursuant to the April
2019 Private Placement consisted of one Common Share and one-half of one Common Share purchase Warrant. Each full Warrant entitles
the holder thereof to purchase one additional Common Share at a price of C$0.72 for a period of two years from their date of issuance.
Proceeds from the April 2019 Private Placement will be used for working capital and general corporate purposes.
Elk Creek Project Update
During the
first quarter of fiscal year 2019, we received a new proposed design for the underground portion of the Elk Creek Project (the
“mine design”) based on detailed underground engineering conducted by the Nordmin Group of Companies (“Nordmin”).
During the quarter ended March 31, 2019, we completed our review and analysis of the mine design recommendations submitted by Nordmin
and on April 16, 2019, we announced the results of the updated underground mine design and supporting infrastructure, the results
of an update to the Elk Creek Project’s mineral resources and mineral reserve estimate, and the 2019 Feasibility Study based
on the new mine design. A full NI 43-101 Technical Report, incorporating the results of the 2019 Feasibility Study, is expected
to be filed by May 31, 2019.
Primary
changes reflected in the updated mine design include a longer mine life, mining at greater depths to target higher niobium grades
in the early years of mining operations, utilizing artificial ground freezing methods to mitigate water inflow during shaft construction,
eliminating the active dewatering system consisting of up to 15 large dewatering wells and replacing a ventilation raise system
with a ventilation shaft sinking method. In addition, the new mine design contemplates treating all water produced during mining
operations, and water used in ore processing, on site for use in operations and replacing a brackish water discharge system with
a system that produces solid salt that would be impounded on site.
Summary of Key Evaluation Metrics and
Projected Economic Results Included in the 2019 Feasibility Study
The 2019
Feasibility Study financial model is based upon a mine life of 36 years with an annual steady state ore throughput rate of 1,009,000
metric tonnes (“mt”). When in operation, the Elk Creek Project is expected to be the sole U.S producer of Scandium
trioxide (“Sc
2
O
3
”) and a commercial version of Nb, known as Ferroniobium (“FeNb”),
and one of only a handful of producers in the world of these critical and strategic materials. Overall, according to the 2019 Feasibility
Study, the Elk Creek Project is estimated to generate $20.8 billion in gross life of mine (“LoM”) revenue and $370
million in averaged annual earnings before interest, taxes, depreciation, and amortization (“EBITDA”) over its operating
life. The table below summarizes and compares key financial and operational metrics of the 2019 Feasibility Study findings against
the results of our previously released 2017 Feasibility Study.
Elk Creek Project
Comparison of Selected Metrics and Results
|
|
|
Feasibility Study
|
|
|
|
|
Description
|
|
2017
|
|
|
2019
|
|
|
Change
|
|
Financial Metrics
|
Pre-Tax NPV (8% discount)
|
|
$
|
2,291
|
|
|
$
|
2,564
|
|
|
|
12.0
|
%
|
Pre-Tax Internal Rate of Return (“IRR”)
|
|
|
24.3
|
%
|
|
|
27.3
|
%
|
|
|
12.4
|
%
|
After-Tax NPV
|
|
$
|
1,666
|
|
|
$
|
2,098
|
|
|
|
25.9
|
%
|
After-Tax IRR
|
|
|
21.7
|
%
|
|
|
25.8
|
%
|
|
|
18.9
|
%
|
After-tax payback period from production onset (years)
|
|
|
3.68
|
|
|
|
2.86
|
|
|
|
(22.3
|
)%
|
Net pre-production Capital Expenditures (“CAPEX”)
|
|
$
|
1,008
|
|
|
$
|
879
|
|
|
|
(12.8
|
)%
|
Mine Life (years)
|
|
|
32.0
|
|
|
|
36.0
|
|
|
|
12.5
|
%
|
LoM Gross Revenue
|
|
$
|
17,906
|
|
|
$
|
20,807
|
|
|
|
16.2
|
%
|
Nb
|
|
$
|
5,695
|
|
|
$
|
7,860
|
|
|
|
38.0
|
%
|
Sc
|
|
$
|
11,896
|
|
|
$
|
12,532
|
|
|
|
5.4
|
%
|
Ti
|
|
$
|
316
|
|
|
$
|
414
|
|
|
|
31.3
|
%
|
Elk Creek Project
Comparison of Selected Metrics and Results
|
|
|
Feasibility Study
|
|
|
|
|
Description
|
|
2017
|
|
|
2019
|
|
|
Change
|
|
Averaged Annual EBITDA
1
over LoM
|
|
$
|
370
|
|
|
$
|
370
|
|
|
|
—
|
|
Averaged EBITDA
1
Margin (EBITDA as % of total revenue)
|
|
|
69
|
%
|
|
|
67
|
%
|
|
|
(3.4
|
)%
|
LoM Operating Expenditures (“OPEX”) ($/mt)
|
|
$
|
179.99
|
|
|
$
|
196.41
|
|
|
|
9.1
|
%
|
Effective Tax Rate
|
|
|
24.1
|
%
|
|
|
17.5
|
%
|
|
|
(27.3
|
)%
|
Operational Metrics
|
Ore Mined (kilotonnes (“kt”))
|
|
|
31,661
|
|
|
|
36,313
|
|
|
|
14.7
|
%
|
Mining Rate (mt/day)
|
|
|
2,762
|
|
|
|
2,764
|
|
|
|
0.1
|
%
|
Niobium pentoxide (“Nb
2
O
5
”) Grade
|
|
|
0.79
|
%
|
|
|
0.81
|
%
|
|
|
2.3
|
%
|
Sc Grade (grams/mt)
|
|
|
71.58
|
|
|
|
65.71
|
|
|
|
(8.2
|
)%
|
Titanium dioxide (“TiO
2
”) Grade
|
|
|
2.81
|
%
|
|
|
2.86
|
%
|
|
|
1.9
|
%
|
Processing Rate (kt/year)
|
|
|
1,009
|
|
|
|
1,009
|
|
|
|
—
|
|
Average Recovery Nb
2
O
5
|
|
|
82.4
|
%
|
|
|
82.4
|
%
|
|
|
—
|
|
Average Recovery Sc
|
|
|
93.1
|
%
|
|
|
93.1
|
%
|
|
|
—
|
|
Average Recovery TiO
2
|
|
|
40.3
|
%
|
|
|
40.3
|
%
|
|
|
—
|
|
Realized Product Prices:
|
|
|
|
|
|
|
|
|
|
|
|
|
Nb ($/kilogram (“kg”), Nb as FeNb)
|
|
$
|
39.60
|
|
|
$
|
46.55
|
|
|
|
17.5
|
%
|
Sc
2
O
3
($/kg as Sc
2
O
3
)
|
|
$
|
3,675
|
|
|
$
|
3,676
|
|
|
|
0.0
|
%
|
TiO
2
($/kg as TiO
2
)
|
|
$
|
0.88
|
|
|
$
|
0.99
|
|
|
|
12.4
|
%
|
Payable Metal:
|
|
|
|
|
|
|
|
|
|
|
|
|
Nb (mt)
|
|
|
143,824
|
|
|
|
168,861
|
|
|
|
17.4
|
%
|
Sc
2
O
3
(mt)
|
|
|
3,237
|
|
|
|
3,410
|
|
|
|
5.3
|
%
|
TiO
2
(mt)
|
|
|
359,128
|
|
|
|
418,841
|
|
|
|
16.6
|
%
|
Totals may not sum
due to rounding.
CAPEX Estimates Included in the 2019
Feasibility Study
According to the 2019 Feasibility Study,
total upfront CAPEX for the Elk Creek Project is $1.14 billion, a 5.1% increase over the 2017 Feasibility Study and which reflects
the following: additional and larger water treatment equipment; higher costs due to inflation between 2017 and 2019; replacing
a ventilation raise system with a ventilation shaft sinking method using proven artificial ground freezing methods to mitigate
water inflow risks for this requirement; and higher capital costs incurred by initially mining at greater depths where ore grades
are higher. In the 2019 Feasibility Study, net pre-production CAPEX is $879 million, which includes a contingency of 10.33%
2
and a pre-production net revenue credit of $265 million, which is generated during a six-month production ramp-up period (versus
a three-month ramp-up in the 2017 Feasibility Study) and is net of pre-production capital and operational costs.
Elk Creek Project
Comparison of Capital Expenditure Estimates
|
|
|
Feasibility Study
|
|
|
|
|
Description
|
|
2017
|
|
|
2019
|
|
|
Change
|
|
Direct Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
Preproduction CAPEX
|
|
$
|
71.0
|
|
|
$
|
83.0
|
|
|
|
16.2
|
%
|
Mining CAPEX
|
|
|
179.0
|
|
|
|
257.0
|
|
|
|
44
|
%
|
Processing CAPEX
(excluding water treatment)
|
|
|
343.0
|
|
|
|
367.0
|
|
|
|
7.1
|
%
|
|
1
|
S
ee “Non-GAAP Financial
Performance Measures” below for a discussion of the use of non-GAAP financial measures.
|
|
2
|
Project contingency percentage is calculated on all features
of the project excluding the water treatment plant, which is quoted on a design-build-operate basis and incorporates its own contingency.
|
Elk Creek Project
Comparison of Capital Expenditure Estimates
|
|
|
Feasibility Study
|
|
|
|
|
Description
|
|
2017
|
|
|
2019
|
|
|
Change
|
|
Water management CAPEX
3
|
|
|
100.0
|
|
|
|
6.0
|
|
|
|
(94
|
)%
|
Water Treatment
4
|
|
|
24.0
|
|
|
|
68.0
|
|
|
|
180
|
%
|
Tailings
|
|
|
20.2
|
|
|
|
21.4
|
|
|
|
6.1
|
%
|
Site preparation
|
|
|
30.6
|
|
|
|
40.6
|
|
|
|
2.6
|
%
|
Indirect Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Mining
|
|
|
21.9
|
|
|
|
23.7
|
|
|
|
8.1
|
%
|
Mining Engineering, Procurement and Construction (“EPC”)
|
|
|
12.3
|
|
|
|
16.0
|
|
|
|
30
|
%
|
Processing
|
|
|
34.1
|
|
|
|
33.4
|
|
|
|
(1.8
|
)%
|
Processing EPC
|
|
|
64.5
|
|
|
|
62.6
|
|
|
|
(2.9
|
)%
|
Site
|
|
|
7.2
|
|
|
|
7.4
|
|
|
|
2.7
|
%
|
Water management
5
|
|
|
10.8
|
|
|
|
8.5
|
|
|
|
(20.8
|
)%
|
Owners Costs
|
|
|
38.4
|
|
|
|
33.6
|
|
|
|
(12.4
|
)%
|
Commissioning
|
|
|
|
|
|
|
|
|
|
|
|
|
Mining
|
|
|
0.7
|
|
|
|
1.4
|
|
|
|
102
|
%
|
Processing
|
|
|
13.0
|
|
|
|
13.3
|
|
|
|
2.7
|
%
|
Contingency
|
|
|
109.0
|
|
|
|
101.0
|
|
|
|
(7.3
|
)%
|
Sub Total
|
|
$
|
1,088.0
|
|
|
$
|
1,143.0
|
|
|
|
5.1
|
%
|
Net Pre-Production Revenue
|
|
|
(79.0
|
)
|
|
|
(265.0
|
)
|
|
|
234
|
%
|
TOTAL
|
|
$
|
1,008.0
|
|
|
$
|
879.0
|
|
|
|
(12.9
|
)%
|
Totals may not sum
due to rounding.
OPEX Estimates Included in the 2019
Feasibility Study
The following table summarizes our expected
LoM OPEX according to the 2019 Feasibility Study. The 2019 Feasibility Study OPEX is higher than the 2017 Feasibility Study OPEX
as a result of several factors, including but not limited to the following: (1) under the new mine design, we intend to use a contract
mining model as opposed to performing mining operations ourselves; (2) prices for some consumables used in surface processing facilities
are higher than quotes received in 2017; and (3) under the new mine design, water management costs for the Elk Creek Project are
higher as a result of the more intensive water treatment.
Elk Creek Project
Comparison of Operating Expenditure Estimates
|
|
|
Feasibility Study
|
|
|
|
2017
|
|
|
2019
|
|
|
|
LoM Costs
|
|
|
Cost / mt
(US dollars)
|
|
|
LoM Costs
|
|
|
Cost / mt
(US dollars)
|
|
LoM Operating Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mining Costs
|
|
$
|
1,244
|
|
|
$
|
39.30
|
|
|
$
|
1,563
|
|
|
$
|
43.04
|
|
Processing Costs
|
|
|
3,285
|
|
|
|
103.77
|
|
|
|
3,875
|
|
|
|
106.70
|
|
Water Management & Infra
|
|
|
251
|
|
|
|
7.92
|
|
|
|
609
|
|
|
|
16.78
|
|
Tailings Management
|
|
|
46
|
|
|
|
1.44
|
|
|
|
72
|
|
|
|
1.99
|
|
Other Infrastructure
|
|
|
212
|
|
|
|
6.68
|
|
|
|
199
|
|
|
|
5.47
|
|
General and Administrative
|
|
|
268
|
|
|
|
8.47
|
|
|
|
301
|
|
|
|
8.29
|
|
Other Expenses
|
|
|
136
|
|
|
|
4.31
|
|
|
|
229
|
|
|
|
6.30
|
|
Subtotal OPEX
|
|
$
|
5,442
|
|
|
$
|
171.89
|
|
|
$
|
6,847
|
|
|
$
|
188.56
|
|
Royalties/Annual Bond Premium
|
|
|
257
|
|
|
|
8.10
|
|
|
|
285
|
|
|
|
7.84
|
|
Total All-In OPEX
|
|
$
|
5,699
|
|
|
$
|
179.99
|
|
|
$
|
7,132
|
|
|
$
|
196.41
|
|
Totals may not sum due
to rounding.
|
3
|
Water management CAPEX of $100 million in the 2017 Feasibility
Study were primarily attributable to the cost of constructing the then-planned waterline to the Missouri River and costs associated
with pre-production dewatering wells and hydrogeological investigations. For 2019, water management CAPEX encompasses hydrogeological
investigations.
|
|
4
|
Water treatment includes direct costs of the Project’s
water treatment systems.
|
|
5
|
Indirect expenses for water management in the 2017 Feasibility
Study included hydrogeologic investigations and installation and testing of prototype water pumping wells. For 2019, these costs
encompass the indirect costs of building the Project’s water treatment facility.
|
In the 2019 Feasibility Study, the financial
performance estimation and valuation of the Elk Creek Project were conducted using a discounted cash flow methodology over its
36-year mine life and an 8% discount rate.
Elk Creek Project Environmental Performance
under New Mine Design Included in the 2019 Feasibility Study
The new mine design further reinforces
the environmental performance of the Elk Creek Project. Together with previously disclosed environmental and process innovations
incorporated in the 2017 Feasibility Study, the new mine design now incorporates these following strategies and technologies designed
to minimize environmental impacts of operation:
|
·
|
Zero Process Liquid Discharge: The Elk Creek facility will
now operate as a “Zero Process Liquid Discharge” facility, with no releases of process liquids. Instead, both naturally
occurring, brackish (slightly salty) water produced during mining operations, and water used in ore processing, will be treated
on site for use in operations. A solid salt will be produced from water treatment operations which will be stored on site.
|
|
·
|
No Wastewater Discharge to the Missouri River: By treating water on site, the Elk Creek Project
no longer needs to transport water for discharge into the Missouri River. This will release the Elk Creek Project from having to
obtain a specific National Pollutant Discharge Elimination System water quality discharge permit from the State of Nebraska, or
an additional Section 404 permit, or a Section 408 permit from the U.S. Army Corps of Engineers (“USACE”). The Section
408 permit would have required completion of an Environmental Assessment study, a process that is governed by the National Environmental
Policy Act (“NEPA”) and involves review by multiple federal government agencies.
|
|
·
|
Additional Protection of Groundwater Resources Through Artificial Ground Freezing: The Elk Creek
Project’s new mine design will utilize artificial ground freezing as part of the process of sinking the production and ventilation
shafts. Artificial ground freezing creates a temporary frozen barrier that helps to protect groundwater resources in the area while
shaft-sinking operations are underway.
|
|
·
|
Avoidance of Permanent Impacts to Federally Jurisdictional Waters: We designed the layout of the
Elk Creek Project to minimize or avoid permanent impacts to any federally jurisdictional waters and/or wetlands on the property.
This reduced the Elk Creek Project’s expected environmental impacts and allowed the Elk Creek Project to secure a Clean Water
Act Section 404 permit from the USACE under the Nationwide Permit program, a much more efficient and less expensive process than
an individual Section 404 permit. No other NEPA-level federal permits are now expected to be required for the Elk Creek Project.
|
|
·
|
Recycling of Reagents Used in Mineral Processing: Metallurgical and process breakthroughs that
we accomplished in 2016 and 2017 are expected to help reduce the volume of material planned for disposal in the Elk Creek Project’s
tailings storage areas. As more of this material is recycled, the environmental footprint of the Elk Creek Project is reduced.
|
|
·
|
Utilizing Tailings as Underground Mine Backfill: We plan to fill underground voids concurrently
with mining operations using a paste backfill material that contains mine waste material that typically would be stored in above-ground
mine tailings storage areas.
|
Mineral Resources and Mineral Reserves
Estimates Included in the 2019 Feasibility Study
The 2019 Feasibility Study update included
an update to the Elk Creek Project’s mineral resource and mineral reserve, as shown below.
Elk Creek Project
Mineral Resource Summary
As of February 19, 2019
|
Classification
|
|
Cut-off NSR
(DIL)(US$/mt)
|
|
|
Tonnage
(x1000 mt)
|
|
|
Nb
2
O
5
Grade
(%)
|
|
|
Contained
Nb
2
O
5
(mt)
|
|
|
TiO
2
Grade
(%)
|
|
|
Contained
TiO
2
(mt)
|
|
|
Sc
Grade
(ppm)
|
|
|
Contained
Sc
(mt)
|
|
Indicated
|
|
|
180
|
|
|
|
183,185
|
|
|
|
0.54
|
|
|
|
981,092
|
|
|
|
2.15
|
|
|
|
3,940,419
|
|
|
|
57.65
|
|
|
|
10,562
|
|
Inferred
|
|
|
180
|
|
|
|
103,992
|
|
|
|
0.48
|
|
|
|
498,864
|
|
|
|
1.81
|
|
|
|
1,886,181
|
|
|
|
47.38
|
|
|
|
4,928
|
|
Source: Nordmin, 2019. All figures
are rounded to reflect the relative accuracy of the estimates. Totals may not sum due to rounding.
February 19, 2019 Mineral Resource Details
|
Parameter
|
|
Value
|
|
|
Unit
|
Mining Cost
|
|
|
50.0
|
|
|
US$/mt mined
|
Processing
|
|
|
125
|
|
|
US$/mt mined
|
General and Administrative
|
|
|
5.0
|
|
|
US$/mt mined
|
Total Cost
|
|
|
180
|
|
|
US$/mt mined
|
Nb2O5 to Niobium conversion
|
|
|
69.6
|
|
|
%
|
Niobium Process Recovery
|
|
|
82.36
|
|
|
%
|
Niobium Price
|
|
|
39.60
|
|
|
US$/kg
|
TiO
2
Process Recovery
|
|
|
40.31
|
|
|
%
|
TiO
2
Price
|
|
|
0.88
|
|
|
US$/kg
|
Sc Process Recovery
|
|
|
93.14
|
|
|
%
|
Sc to Sc
2
O
3
conversion
|
|
|
153.4
|
|
|
%
|
Sc Price
|
|
|
3,675
|
|
|
US$/kg
|
Calculated CoG NSR diluted 6 %
|
|
|
180
|
|
|
US$/mt
|
|
·
|
Mineral
resources are reported inclusive of the mineral reserve. Mineral resources are not mineral reserves and do not have demonstrated
economic viability. All figures are rounded to reflect the relative accuracy of the estimate and have been used to derive sub-totals,
totals and weighted averages. Such calculations inherently involve a degree of rounding and consequently introduce a margin of
error. Where these occur, Nordmin does not consider them to be material.
|
|
·
|
The
reporting standard adopted for the reporting of the MRE uses the terminology, definitions and guidelines given in the Canadian
Institute of Mining, Metallurgy and Petroleum (“CIM”) Standards on Mineral Resources and Mineral Reserves (May 10,
2014) as required by NI 43-101.
|
|
·
|
CIM
definition standards for mineral resources and mineral reserves (May 2014) defines a mineral resource as:
|
|
o
|
“(A) concentration or occurrence of diamonds, natural
solid inorganic material, or natural solid fossilized organic material including base and precious metals, coal, and industrial
minerals in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects
for economic extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known,
estimated or interpreted from specific geological evidence and knowledge”.
|
|
·
|
Historical
samples have been validated via re-assay programs, and all drilling completed by NioCorp has been subjected to QA/QC. All composites
have been capped and then composited where appropriate, and estimates completed used ordinary kriging. The concession is wholly
owned by and exploration is operated by NioCorp Developments Ltd.
|
|
·
|
The
project is amenable to underground longhole open stoping mining methods. Using results from metallurgical test work, suitable
underground mining and processing costs, and forecast product pricing Nordmin has reported the mineral resource at an NSR cut-off
of US$180/mt.
|
|
·
|
Economic
Assumptions Used to Define Mineral resource Cut-off Value:
|
Diluted NSR (US$) =
Revenue per block
Nb
2
O
5
(diluted) + Revenue per block TiO
2
(diluted) + Revenue per block Sc (diluted)
Diluted tonnes per block
|
·
|
Price
assumptions for FeNb, Sc2O3, and TiO2 are based upon independent market analyses for each product.
|
|
·
|
Price
and cost assumptions are based on the pricing of products at the “mine-gate”, with no additional down-stream costs required.
The assumed products are a ferroniobium product (metallic alloy shots 0.65Nb
Ÿ
0.35%
Fe), a titanium dioxide product in powder form, and scandium trioxide in powder form.
|
|
·
|
The
“reasonable prospects for economic extraction” requirement generally implies that the quantity and grade estimates meet
certain economic thresholds and that the mineral resources are reported at an appropriate Cut-off Grade (
“CoG”
),
considering extraction scenarios and processing recoveries. Based on this requirement, Nordmin considers that major portions of
the project are amenable for underground extraction with a processing method to recover FeNb (as the saleable product of Nb2O5),
TiO2, and Sc2O3 products.
|
|
·
|
The
result of positive indications from the company’s metallurgical testing and development program, titanium (TiO2) and scandium
(Sc) were added to the mineral resource Statement in February 2015. Both metals can be recovered with simple additions to the
existing process flowsheet and would provide additional revenue streams that would complement the planned production of ferroniobium.
|
|
·
|
Nordmin
has provided reasonable estimates of the expected costs based on the knowledge of the style of mining (underground) and potential
processing methods (by 3
rd
party Qualified Persons).
|
|
·
|
Mineral
Resource effective date February 19, 2019.
|
|
·
|
Nordmin
completed a site inspection of the deposit by Glen Kuntz, BSc, P.Geo., Consulting Specialist - Geology/Mining, an appropriate
“independent qualified person” as this term is defined in NI 43-101.
|
Elk Creek Project
Mineral Reserve Summary
As of February 19, 2019
|
Classification
|
|
Tonnage
(x1000 mt)
|
|
|
Nb
2
O
5
Grade
(%)
|
|
|
Contained
Nb
2
O
5
(mt)
|
|
|
Payable
Nb
(mt)
|
|
|
TiO
2
Grade
(%)
|
|
|
Contained
TiO
2
(mt)
|
|
|
Payable
TiO
2
(mt)
|
|
|
Sc Grade
(ppm)
|
|
|
Contained
Sc
(mt)
|
|
|
Payable
Sc
2
O
3
(mt)
|
|
Proven
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Probable
|
|
|
36,313
|
|
|
|
0.81
|
|
|
|
293,321
|
|
|
|
168,861
|
|
|
|
2.86
|
|
|
|
1,039,050
|
|
|
|
418,841
|
|
|
|
65.7
|
|
|
|
2,387
|
|
|
|
3,410
|
|
Total Proven and Probable
|
|
|
36,313
|
|
|
|
0.81
|
|
|
|
293,321
|
|
|
|
168,861
|
|
|
|
2.86
|
|
|
|
1,039,050
|
|
|
|
418,841
|
|
|
|
65.7
|
|
|
|
2,387
|
|
|
|
3,410
|
|
Source: Nordmin, 2019. All figures
are rounded to reflect the relative accuracy of the estimates. Totals may not sum due to rounding.
February 19, 2019 Mineral Reserve Details
|
Parameter
|
|
Value
|
|
|
Unit
|
Mining Cost
|
|
|
43.55
|
|
|
US$/mt mined
|
Processing
|
|
|
108.16
|
|
|
US$/mt mined
|
Water Management and Infrastructure
|
|
|
13.71
|
|
|
US$/mt mined
|
Tailings Management
|
|
|
1.35
|
|
|
US$/mt mined
|
Other Infrastructure
|
|
|
6.96
|
|
|
US$/mt mined
|
General and Administrative
|
|
|
8.65
|
|
|
US$/mt mined
|
Royalties/Annual Bond Premium
|
|
|
7.53
|
|
|
US$/mt mined
|
Total Cost
|
|
|
189.91
|
|
|
US$/mt mined
|
Nb
2
O
5
to Niobium conversion
|
|
|
69.6
|
|
|
%
|
Niobium Process Recovery
|
|
|
82.36
|
|
|
%
|
Niobium Price
|
|
|
39.60
|
|
|
US$/kg
|
TiO
2
Process Recovery
|
|
|
40.31
|
|
|
%
|
TiO
2
Price
|
|
|
0.88
|
|
|
US$/kg
|
Sc Process Recovery
|
|
|
93.14
|
|
|
%
|
Sc to Sc
2
O
3
conversion
|
|
|
153.4
|
|
|
%
|
Sc Price
|
|
|
3,675
|
|
|
US$/kg
|
|
·
|
Nordmin
has reported the mineral reserve based on the mine design, mine plan, and cash-flow model utilizing an average cut-off grade of
0.788% NB
2
O
5
with an NSR of $500/mt.
|
|
·
|
Nordmin
considers that the mineral reserve is amenable for underground extraction with a processing method to recover FeNb (as the saleable
product of Nb
2
O
5
), TiO
2
, and Sc
2
O
3
products.
|
|
·
|
The
economic assumptions used to define Mineral Reserve cut-off grade are as follows:
|
|
o
|
Annual life of mine (LoM) production rate of ~7,220 tonnes
of FeNb/annum,
|
|
§
|
Initial
elevated five-year production rate ~ 7,351 tonnes of FeNb/annum
|
|
o
|
Mining dilution of ~6% was applied to all stopes and development,
based on 3% for the primary stopes, 9% for the secondary stopes, and 5% for ore development.
|
|
o
|
Mining recoveries of 95% were applied.
|
|
o
|
Price assumptions for FeNb, Sc
2
O
3
,
and TiO
2
are based upon independent market analyses for each product.
|
|
o
|
Price
and cost assumptions are based on the pricing of products at the “mine-gate”, with no additional down-stream costs required.
The assumed products are a ferroniobium product (metallic alloy shots 0.65Nb
Ÿ
0.35%
Fe), a titanium dioxide product in powder form, and scandium trioxide in powder form.
|
|
·
|
The
mineral reserve has an average LoM NSR of $538.63 /tonne.
|
|
·
|
Nordmin
has provided detailed estimates of the expected costs based on the knowledge of the style of mining (underground) and potential
processing methods (by 3
rd
party Qualified Persons).
|
|
·
|
Mineral
Reserve effective date February 19, 2019. The financial model was run post-February 2019, which reflects a total cost of $196.41
versus $189.91 used in the February 19, 2019 Mineral Reserve Details Table above. Nordmin does not consider this a material change.
|
|
·
|
Price
variances for commodities is based on updated independent market studies versus earlier projected pricing. The updated independent
market studies do not have a negative effect on the reserve.
|
|
·
|
Nordmin
completed a site inspection of the deposit through a subcontractor, Jean-Francois St-Onge, P.Eng, Associate Consulting Specialist - Mining, an appropriate
“independent qualified person” as this term is defined in NI 43-101.
|
Other Activities
In addition to finalizing the mine design
and releasing the 2019 Feasibility Study, we continued to advance other Elk Creek Project-related work during the quarter. Primary
activities included:
|
·
|
Continued
development of an air construction permit (the “Air Permit”) application for the Nebraska Department of Environmental
Quality, including the detailed engineering necessary to support the submission of the Air Permit application , which we expect
to file in calendar year 2019; and
|
|
·
|
Continued
the competitive process to identify and select engineering, procurement and construction firms for surface development.
|
Our long-term financing efforts continued
during the quarter ended March 31, 2019, and we expect to undertake the following planned activities to advance the Elk Creek Project
through to the construction phase as funds become available through the Company’s fundraising efforts:
|
·
|
File the updated NI-43-101 Technical Report for the Elk
Creek Project on SEDAR by May 31, 2019.
|
|
·
|
Secure project finance necessary to move the Elk Creek
Project to construction and commercial operation.
|
|
·
|
Submit a construction air permit application to the State
of Nebraska, along with other permit applications that will be needed for construction.
|
|
·
|
Make formal awards of EPC contracts.
|
|
·
|
Continue detailed engineering for the Elk Creek Project’s
mine and surface facilities.
|
Financial and Operating Results
The Company continues to expense all expenditures
when incurred, except for equipment, which is capitalized. The Company has no revenues from mining operations. Operating expenses
incurred related primarily to performing exploration activities, as well as the activities necessary to support corporate and shareholder
duties and are detailed in the following table.
|
|
For the Three Months
Ended March 31,
|
|
|
For the Nine Months
Ended March 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee-related costs
|
|
$
|
552
|
|
|
$
|
410
|
|
|
$
|
1,267
|
|
|
$
|
1,809
|
|
Professional fees
|
|
|
71
|
|
|
|
150
|
|
|
|
216
|
|
|
|
543
|
|
Exploration expenditures
|
|
|
858
|
|
|
|
483
|
|
|
|
2,863
|
|
|
|
1,499
|
|
Other operating expenses
|
|
|
106
|
|
|
|
307
|
|
|
|
457
|
|
|
|
994
|
|
Total operating expenses
|
|
|
1,587
|
|
|
|
1,350
|
|
|
|
4,803
|
|
|
|
4,845
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in financial instrument fair value
|
|
|
-
|
|
|
|
1,514
|
|
|
|
633
|
|
|
|
1,811
|
|
Foreign exchange loss (gain)
|
|
|
(125
|
)
|
|
|
180
|
|
|
|
73
|
|
|
|
(21
|
)
|
Interest expense
|
|
|
55
|
|
|
|
99
|
|
|
|
210
|
|
|
|
274
|
|
(Gain) loss on available for sale securities
|
|
|
2
|
|
|
|
3
|
|
|
|
4
|
|
|
|
10
|
|
Income tax expense
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net Loss
|
|
$
|
1,519
|
|
|
$
|
3,146
|
|
|
$
|
5,723
|
|
|
$
|
6,919
|
|
Nine months ended March 31, 2019 compared
to nine months ended March 31, 2018
Significant items affecting
operating expenses are noted below:
Employee-related costs
decreased
due to decreased share-based compensation costs reflecting the timing of Option issuances and the corresponding vesting periods,
as well as the number of Options granted and associated fair value calculations.
Professional fees
include
legal and accounting services. Overall, these fees decreased, reflecting the timing of legal fees associated with SEC filings and
ongoing compliance efforts.
Exploration expenditures
increased reflecting our ongoing efforts to evaluate the mine engineering design changes proposed by Nordmin and the related
costs associated with developing the 2019 Feasibility Study as well as costs incurred to develop the detailed engineering necessary
to support the submission of the Air Permit application.
Other operating expenses
include investor relations, general office expenditures, equity offering and proxy expenditures and other miscellaneous costs.
These costs decreased primarily due to the timing of Option issuances, the corresponding vesting periods, the number of Options
granted, and associated fair value calculations for Board members, as well as the timing of financial and investor relations services.
Other significant items impacting the change
in the Company’s net loss are noted below
:
Change in financial instrument
fair value
represents non-cash changes in the market value of the Convertible Securities, which are carried at fair value,
as well as changes in the market value of the derivative liability component of the Company’s outstanding convertible promissory
notes, and the fair market value of Warrants issued in connection with the funding of the Original Convertible Security and the
Subsequent Convertible Security. The 2018 loss includes the value of Warrants issued to Lind in connection with the Subsequent
Convertible Security funding, as well as recognition of prepaid interest incurred on funding.
Foreign exchange (gain) loss
is primarily due to changes in the U. S. dollar against the Canadian dollar and reflects the timing of foreign currency transactions
and subsequent changes in exchange rates.
Three months ended March 31, 2019 compared
to three months ended March 31, 2018
Overall, the increase in net loss for the
three months ended March 31, 2019 as compared to the same period in 2018 is the result of primarily the same factors underlying
the six-month changes, as discussed above, with respect to professional fees, exploration expenditures, and foreign exchange (gain)
loss. The increase in employee-related costs in 2019 as compared to 2018 is due to the timing of option amortization. The decrease
in loss for changes in financial instrument fair values in 2019 as compared to 2018 relates to warrant expense associated with
Lind fundings which occurred in 2018.
Liquidity and Capital Resources
We have no revenue generating operations
from which we can internally generate funds. To date, our ongoing operations have been financed by the sale of our equity securities
by way of private placements, convertible securities issuances, and the exercise of incentive stock options and share purchase
warrants. We believe that we will be able to secure additional private placement financings in the future, although we cannot predict
the size or pricing of any such financings. In addition, we may raise funds through the sale of interests in our mineral properties,
although current market conditions have substantially reduced the number of potential buyers/acquirers of any such interests.
As of March 31, 2019, the Company had cash
of $0.1 million and a working capital deficit of $4.5 million, compared to cash of $0.1 million and working capital deficit of
$3.4 million on June 30, 2018. Working capital deficit increased due to the timing of 2019 expenditures for the 2019 Feasibility
Study work.
We expect
that the Company will operate at a loss for the foreseeable future. The Company’s current planned operational needs are approximately
$4.6 million until June 30, 2019 net of funds received from the recently completed April 2019 Private Placement. In addition to
outstanding accounts payable and short-term liabilities, our average monthly expenditures are approximately $350 per month where
approximately $270 is for corporate overhead and estimated costs related to securing financing necessary for advancement of the
Elk Creek Project. Approximately $80 per month is planned for expenditures relating to the advancement of Elk Creek Project by
NioCorp’s wholly-owned subsidiary, Elk Creek Resources Corp. The Company’s ability to continue operations and fund
our current work plan is dependent on management’s ability to secure additional financing.
The Company
anticipates that it may need to raise $7.7 million - $8.5 million to continue planned operations for the next twelve months focused
on financing and detailed engineering efforts related to the Elk Creek Project. Management is actively pursuing such additional
sources of debt and equity financing, and while it has been successful in doing so in the past, there can be no assurance it will
be able to do so in the future.
Elk Creek property
lease commitments are $16 until June 30, 2019. To maintain its currently held properties and fund its currently anticipated general
and administrative costs and planned exploration and development activities at the Elk Creek Project for the fiscal year ending
June 30, 2019, the Company will likely require additional financing during the current fiscal year. Should such financing not be
available in that time-frame, we will be required to reduce our activities and will not be able to carry out all our presently
planned activities at the Elk Creek Project.
We currently have no further funding commitments
or arrangements for additional financing at this time (other than the potential exercise of Options and Warrants) and there is
no assurance that we will be able to obtain additional financing on acceptable terms, if at all. On January 15, 2019, approximately
9.0 million outstanding warrants priced at C$0.75 expired unexercised. There is significant uncertainty that we will be able to
secure any additional financing in the current equity or debt markets. The quantity of funds to be raised and the terms of any
proposed equity or debt financing that may be undertaken will be negotiated by management as opportunities to raise funds arise.
management intends to pursue funding sources of both debt and equity financing, including but not limited to the issuance of equity
securities in the form of Common Shares, Warrants, subscription receipts, or any combination thereof in units of the Company pursuant
to private placements to accredited investors or pursuant to equity lines of credit or public offerings in the form of underwritten/brokered
offerings, at-the-market offerings, registered direct offerings, or other forms of equity financing and public or private issuances
of debt securities including secured and unsecured convertible debt instruments or secured debt project financing. Management does
not currently know the terms pursuant to which such financings may be completed in the future, but any such financings will be
negotiated at arm’s-length. Future financings involving the issuance of equity securities or derivatives thereof will likely
be completed at a discount to the then-current market price of the Company’s securities and will likely be dilutive to current
shareholders.
The audit opinion and notes that accompany
our financial statements for the year ended June 30, 2018 disclose a “going concern” qualification and disclosures
to our ability to continue in business. The financial statements included in this Quarterly Report on Form 10-Q have been prepared
under the assumption that we will continue as a going concern. We are an exploration stage company and we have incurred losses
since our inception. We do not have sufficient cash to fund normal operations and meet debt obligations for the next twelve months
without deferring payment on certain current liabilities and raising additional funds. We believe that the going concern condition
cannot be removed with confidence until the Company has entered into a business climate where funding of its planned ongoing operating
activities is secured.
We have no exposure to any asset-backed
commercial paper. Other than cash held by our subsidiaries for their immediate operating needs in Colorado and Nebraska, all of
our cash reserves are on deposit with major United States and Canadian chartered banks. We do not believe that the credit, liquidity,
or market risks with respect thereto have increased as a result of the current market conditions. However, in order to achieve
greater security for the preservation of our capital, we have, of necessity, been required to accept lower rates of interest, which
has also lowered our potential interest income.
Operating Activities
During the nine months ended March 31,
2019, the Company’s operating activities consumed $3.1 million of cash (2018: $4.6 million). The cash used in operating activities
for 2019 reflects the Company’s funding of losses of $5.7 million, partially offset by share-based compensation charges and
other non-cash transactions. Overall, 2019 operational outflows decreased slightly from 2018 as our expenditures related to updating
underground mine engineering and developing the 2019 Feasibility Study were offset by an increase in accounts payable. Going forward,
the Company’s working capital requirements are expected to increase substantially in connection the development of the Elk
Creek Project.
Financing Activities
Financing inflows were $3.2 million during the nine months ended
March 31, 2019 as compared to $4.6 million during the corresponding period in 2018, primarily reflecting the timing of private
placement issuances initiated during the comparative periods.
Cash Flow Considerations
The Company has historically relied upon equity financings and,
to a lesser degree, debt financings, to satisfy its capital requirements and will continue to depend heavily upon equity capital
to finance its activities. The Company may pursue debt financing in the medium term if it is able to procure such financing on
terms more favorable than available equity financing; however, there can be no assurance the Company will be able to obtain any
required financing in the future on acceptable terms.
The Company has limited financial resources
compared to its proposed expenditures, no source of operating income, and no assurance that additional funding will be available
to it for current or future projects, although the Company has been successful in the past in financing its activities through
the sale of equity securities.
The ability of the Company to arrange additional
financing in the future will depend, in part, on the prevailing capital market conditions and its success in developing the Elk
Creek Project. Any quoted market for the Common Shares may be subject to market trends generally, notwithstanding any potential
success of the Company in creating revenue, cash flows, or earnings, and any depression of the trading price of the Common Shares
could impact its ability to obtain equity financing on acceptable terms.
Historically, the Company has used net
proceeds from issuances of Common Shares to provide sufficient funds to meet its near-term exploration and development plans and
other contractual obligations when due. However, further development and construction of the Elk Creek Project will require substantial
additional capital resources. This includes near-term funding and, ultimately, funding for Elk Creek Project construction and other
costs. See “
Liquidity and Capital Resources
” above for the Company’s discussion of arrangements related
to possible future financings.
Contractual Obligations
There have been no material changes to
our contractual obligations
discussed in “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” under the heading “Tabular Disclosure of Contractual
Obligations”
as of June 30, 2018, in our Annual Report on Form 10-K for the fiscal year ended June 30, 2018, other
than the continued conversion of outstanding convertible Lind debt.
Off Balance Sheet Arrangements
The Company has no off balance sheet arrangements.
Critical Accounting Policies
There have been no material changes in
our critical accounting policies
discussed in “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” under the heading “Critical Accounting Policies”
as of June 30, 2018, in our Annual Report on Form 10-K for the fiscal year ended June 30, 2018.
Certain U.S. Federal Income Tax Considerations
The Company has been a “passive foreign
investment company” (“PFIC”) as defined under Section 1297 of the U.S. Internal Revenue Code of 1986, as amended,
in recent years and expects to continue to be a PFIC in the future. Current and prospective United States shareholders should consult
their tax advisors as to the tax consequences of PFIC classification and the U.S. federal tax treatment of PFICs. Additional information
on this matter is included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2018, under the
heading “Risks Related to the Common Shares.”
Non-GAAP Financial Performance Measures
Non-GAAP financial performance measures
are intended to provide additional information only and do not have any standard meaning prescribed by US GAAP. These measures
should not be considered in isolation or as a substitute for performance measures prepared in accordance with US GAAP.
The 2019 Feasibility Study uses non-GAAP financial performance
measures, such as Averaged Annual EBITDA and Averaged EBITDA Margin, for purposes of projecting the economic results of the Elk
Creek Project. We are unable to provide a reconciliation of these forward-looking non-GAAP measures to the most comparable US GAAP
financial performance measures because certain information needed to reconcile those non-GAAP measures to the most comparable US
GAAP financial performance measures is dependent on future events, some of which are outside the control of the Company, such as
FeNb, Sc2O3 and TiO2 prices, interest rates and exchange rates. Moreover, estimating such US GAAP measures with the required precision
necessary to provide a meaningful reconciliation is extremely difficult and could not be accomplished without unreasonable effort.